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Opening-up the objective function: choice behavior and economic and non-economic variables—core and marginal altruism

Listed author(s):
  • Morris Altman

    ()

    (Department of Economics, University of Saskatchewan)

A revised model of the preference function is presented incorporating utility maximizing acts of material self-sacrifice. This model incorporates neoclassical and behavioral arguments, allowing for the stylized fact that economic agents are motivated by both material and non-material incentives. Given such a preference function, choice behavior is modeled as a function of relative opportunity costs (price) and real income. Preferences are determined by a variety of variables inclusive of social capital and education. There is therefore a core preference based upon non-economic variables and a ‘marginal' component which is a function of conventional economic variables. The relative importance of these two components in determinating choice behavior is an empirical question. Building upon conventional tools, a demand curve for moral acts is derived and underlying income and substitution effects discussed. Empirical evidence from the tipping literature is used to illustrate the model.

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File URL: http://www.accessecon.com/pubs/EB/2006/Volume4/EB-06D00022A.pdf
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Article provided by AccessEcon in its journal Economics Bulletin.

Volume (Year): 4 (2006)
Issue (Month): 33 ()
Pages: 1-7

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Handle: RePEc:ebl:ecbull:eb-06d00022
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  1. Simon, Herbert A, 1978. "Rationality as Process and as Product of Thought," American Economic Review, American Economic Association, vol. 68(2), pages 1-16, May.
  2. Andreoni, James, 1989. "Giving with Impure Altruism: Applications to Charity and Ricardian Equivalence," Journal of Political Economy, University of Chicago Press, vol. 97(6), pages 1447-1458, December.
  3. Andreoni, James, 1990. "Impure Altruism and Donations to Public Goods: A Theory of Warm-Glow Giving?," Economic Journal, Royal Economic Society, vol. 100(401), pages 464-477, June.
  4. Morris Altman, 1999. "The Methodology of Economics and the Survival Principle Revisited and Revised: Some Welfare and Public Policy Implications of Modeling the Economic Agent," Review of Social Economy, Taylor & Francis Journals, vol. 57(4), pages 427-449.
  5. Kahneman, Daniel & Knetsch, Jack L & Thaler, Richard, 1986. "Fairness as a Constraint on Profit Seeking: Entitlements in the Market," American Economic Review, American Economic Association, vol. 76(4), pages 728-741, September.
  6. Vernon L. Smith, 2003. "Constructivist and Ecological Rationality in Economics," American Economic Review, American Economic Association, vol. 93(3), pages 465-508, June.
  7. Ofer H. Azar, 2003. "The implications of tipping for economics and management," Others 0309002, EconWPA.
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